globalinequality

Saturday, September 16, 2017

In almost all recent literature that analyzes
Br-exit and Trump-entry, there is a constant theme of a fall from the heady
days at the end of the Cold War, of pining for a time when unstoppable victory
of democracy and neoliberal economics was a certainty and liberal capitalism stood
at the pinnacle of human achievement.

Such narratives always filled me with
discomfort. It is in part because I never believed in them and because my personal
experience was quite different. Rather than believing in the end of history, I
saw the end of the Cold War as an ambivalent event: good for many people
because it brought them national liberation and the promise of better living
standards, but traumatic for others because it brought them the rise of vicious
nationalism, wars, unemployment and disastrous declines in income.

I know that I was influenced in that
by a very clear realization that, once the Berlin Wall fell, the civil war in
Yugoslavia was inevitable (I still remember a rather somber dinner that I
shared with my mother on that day in November) and by the first hand experience
of sudden misery that befell Russia in the early 1990s when I travelled there
working for the World Bank. So, I was aware that my discomfort with triumphalism
could be explained by these two, rarely found together, circumstances. It was
perhaps an idiosyncratic discomfort.

But reading other books, and
especially the highly acclaimed Tony Judt, I realized that the discomfort went
further. In a deluge of literature that was written or published after the end
of the Cold War, I just could not find almost anything that mirrored my own experiences
from the Yugoslavia of the 1960s and 1970s. However hard I tried I just could
not see anything in my memories that had to deal with collectivization, killings,
political trials, endless bread lines, imprisoned free thinkers and other stories
that are currently published in literary magazines. It is even stranger because
I was very politically precocious; without exaggeration I think I was more politically-minded
than 99% of my peers in the then Yugoslavia.

But my memories of the 1960s and the
1970s are different. I remember long dinners discussing politics, women
and nations, long Summer vacations, foreign travel, languid sunsets,
whole-night concerts, epic soccer games, girls in mini-skirts, the smell of the new apartment in
which my family moved, excitement of new books and of buying my favorite weekly
on the evening before the day when it would hit the stands…. I cannot find any
of that in Judt, Svetlana Alexeevich or any other writer. I know that some of
the memories may be influenced by nostalgia, but as hard as I try I still find
them as my dominant memories. I remember many details of each of them to
believe that my nostalgia somehow “fabricated” them. I just cannot say they did
not happen.

Thus I came to realize that all these
other memories from Eastern Europe and Communism that pop-up on today’s screens
and “populate” the literature, have almost nothing in common with me. And yet I
lived under such a regime for thirty years! I know that my story may not be
representative, not the least because the 1970s were the years of prosperity in
Yugoslavia and because that peripheral part of Europe then played, thanks to
Tito’s non-alignment, a world political role that it never had in 2,000
years—but still, after I adjust for all of that, I believe that some other,
non-preordained, stories of “underdevelopment” and Communism have the right to
be told too. Or should we willfully destroy our memories?

Yet it is very difficult to tell these
other stories. History is written, we are told, by the victors and stories that
do not fit the pattern narrative are rejected. This is especially the case, I
have come to believe, in the United States that has created during the Cold War
a formidable machinery of open and concealed propaganda. That machinery cannot
be easily turned off. It cannot produce narratives that do not agree with the
dominant one because no one would believe them or buy such books. There is an almost daily and active rewriting
of history to which many people from Eastern Europe participate: some because
they do have such memories, some because they force themselves (often successfully)
to believe that they do have such memories. Others can remain with their individual
memories which, at their passing, will be lost. The victory shall be complete.

When I was in 2006 in Leipzig to
watch a World Cup game, I was struck to see, displayed in a modest store window,
a picture of the East German soccer team that in 1974, in the then World Cup
played in West Germany, unexpectedly beat the West German team by 1-0. None of
the players in that East German squad went to become rich and famous. They were
just home boys. It was I thought a small, poignant, even in some ways pathetic, attempt
to save the memories and say: “We also did something in these forty years; we
existed; it was not all meaningless, “nasty and brutish”.

Thinking of those years in political
terms, one moment now, perhaps strangely, stands out for me. It was the Summer
of 1975. The Helsinki conference on peace and stability in Europe was just
taking place. It was closing a chapter on the World War II. It came just months
after the liberation of Saigon. And I recall being on a beach, reading about
the Helsinki conference and thinking, linking the two events: there will be no
wars in Europe in my lifetime, and imperialism has been defeated. How wrong was
I on both accounts.

Monday, September 4, 2017

Perhaps the most momentous set of economic
decisions in the world in the past half-century occurred in the period 1976-1989
when after Mao’s death Chinese leadership decided to change course and to focus
on economic development of China rather than on “class struggle”. The change in
focus led to the creationof market
economy in China, phenomenal reduction in China’s (and thus global) poverty, almost
20 times increased GDP per capita (no, “20” is not a typo), and finally around 2015
made China’s the largest economy in the world (in purchasing power terms).

But none of that would have occurred had
Chinese leaders not made key decisions in the decade after Mao’s death. Julian Gewirtrz’s “Unlikely Partners” charts, with an extraordinary attention to detail,
these world-historic decisions and focuses on the role that foreign economists played
in the early stages of China’s transformation. But while the declared focus
of the book is on the foreign-to-Chinese interaction and cooperation, with the
high point (extremely well described) being a week-long cruise-seminar in August
1985 along the Yangtze river on a luxury boat with about a hundred Chinese and
foreign economists participating, among whom the most important for Chinese later
reforms proved to be Janos Kornai, Wlodimierz Brus and James Tobin, the book is
more than that. It documents almost 15 years (from Mao’s death to 1992) of discussions
and policy decisions about the “goal model” of Chinese economy: relations
between the government and enterprises, role of the plan and the market,
ownership structure, macroeconomic policies and the like. Practically, the
entire “new” Chinese economy, from the Central Bank to the Special Economic
Zones to state conglomerates was “invented” then.

It is thus an indisputably necessary book
for anyone who wants to learn more about China and about that extraordinary
period of intellectual ferment. (It was not all rosy though: there were fights and
imprisonments related to the “Fifth Modernization”, the home imprisonment of
Zhao Ziyang and his becoming a “non-person”,
and most importantly the Tiananmen killings.) But to imitate Deng famous
statement on Mao, it could be said that the period 1976-92 was 90% right and 10%
wrong.

Gewirtz displays vast amount of knowledge
of China (including speaking and reading Chinese and thus using numerous
Chinese sources) and scholarship (there are more than 100 pages of detailed
footnotes). He has spoken to most of the surviving participants of the then
debates or gone through their archives. It is an immense work that deserves
highest praise.

But it does have “problems”.

The book is mostly a chronology of meetings
piled upon meetings, statements of the key actors and the like, and this “annals-like”
approach often does not allow the reader to see forest from the trees. That is,
to realize there are broader questions
being debated. Although even as a chronicle, because the subject matter is riveting
(at least for me), the book reads well, I had the feeling at its end that
Gewirtz should next sit down and write a “histoire raisonée” of what he just
told us in a blow-by-blow fashion. I hope he would do that because I think that
very few people in the world have this level of specific knowledge as Gewirtz.

Next, I have to mention perhaps small
but annoying problem. The book is simply badly edited. This is of course a recurring
problem in recent publications. But it does not seem that anyone has read the book
as a whole, perhaps not even the
author. Thus Zhao Renwei is about 5 or 6 times introduced identically as “mild-mannered”,
another Chinese economist is in about equal number of times presented as “obsessed”
with economics; quite extraordinary on page 199 the acronym CCP, up to that point
probably used several hundred times, is, to the reader’s bemusement introduced—yes,
it stands for the Chinese Communist
Party! Yay! (The same is then repeated on p. 237 when the acronym for the Chinese
Academy of Social Sciences, CASS, similarly used throughout the book, is
explained.) Perhaps that some chapters were written as independent papers and
then stuck together but that still does not justify this degree of sloppiness.

Likewise, the “commodity” in “socialist
commodity economy” , a term that clearly Gewirtz finds perplexing, is explained
about a dozen of times—and unfortunately wrongly. Gewirtz believes that “commodity”
is “a Soviet euphemism” or a “Soviet by-word” for “market” but it is not. It is
not Soviet but Marxist, and actually it goes back to Adam Smith and to the
distinction of value-in-use (good) and value-in-exchange (commodity). It is
used in economics frequently today in terms such as “commodification of labor”
or “petty commodity production”.

There are also mistakes. China did
not rejoin the IMF in 1988 (p. 256) but in 1980 when it rejoined the World Bank
as well. Moreover, it is not that China did not want to join these two
institutions as Gewirtz implies on p. 74. It is rather that it was not allowed
to be member because the United States, that did not recognize the People’s
Republic until 1979 and held veto power in the World Bank and IMF, was blocking
China’s entry.Also, the Polish Round Table talks did not “dissolve
[?] the position of Communist Party general secretary” (p. 221).

Finally, let me move to two
substantive issues.

Gewirtz is confused, or at least does
not distinguish, between different reforms in socialist systems. To simplify,
there were three: (1) the relationship between the center and the enterprises (are
enterprises going to make autonomous decisions about production, hiring etc. or
not), (2) prices and subsidies (is the budget constraint to remain soft or to
be hardened?) and (3) who is the owner (enterprises as parts of the state, or
as independent corporate entities but state-owned, or to be privatized). Almost
all of East European discussion and reform up to around 1985-87 dealt with the
first two issues. So these were discussions about the reform of socialism.

Gewirtz at times appears aware of
that when he cites Brus, Ota Šik or Kornai. The same was true for Chinese
reform—except that China, being in 1976-78 way back in terms of reforms compared
to most East European countries, had to start from scratch, but caught up
remarkably fast so that by the mid-1980s Chinese reforms were ahead of East
European. But these were not reforms of “transition” (presumably to capitalism)
as Gewirtz sometimes implies because they did not touch the ownership structure
of the economy. Their objective was to make state owned (or in Yugoslavia,
labor-managed) enterprises more efficient and more responsible for their
profits and losses; and this required price reforms. Only when the reform discussion
reached the third stage that logically implied questioning state ownership can
we speak of “transition” to capitalism

By not discriminating between these
different reforms, Gewirtz at times imputes to reformists who wanted to reduce state
subsidies and allow market prices a belief (which most of them did not have)
that they wished to reintroduce capitalism. This is of course driven by both ex
post knowledge and by some teleology. In a paradoxical manner Gewirtz thus makes
joint case with most dogmatic central planners who likewise argued that any
introduction of market pricing will inevitably lead the country back to
capitalism. This ex post imputation is in most cases, wrong, and especially so in
a historian whose objective should beto
“seize the moment” and explain the motivation of the participants as they then
were.

My final “problem”, somewhat related
to the last one, is that the book is pretty light on the international political
dimension. The fall of Communism in Poland is mentioned as one of the factors
that might have led to the repression in June 1989, but the Chinese reforms
unfolded in conditions of great turmoil, initiated with Gorbachev’s advent to power in 1985, in
other socialist countries. This, one would submit, must have had some influence
on the thinking of Chinese economic and political elites.

Gewirtrz’s book is definitely worth reading
and studying and could be one of the first stones in that yet to be built
edifice of global socialist economic thought in the 20th century, an
idea that Gewirtz credits to Barry Naughton. Any candidates?